9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2009 (3) TMI 1058 - SC - Indian LawsOrder for Cancellation of licence - diazepam detected on chemical examination of the toddy seized - defaulted in payment of kist, committed an offence punishable u/s 57A(iii) and Section 55(1) of the Abkari Act - Interpretation of the provisions of the Kerala Abkari Act and the Rules framed as the Kerala Abkari Shops (Disposal in Auction) Rules, 1974 ( the Rules ) - Heydon s Rule - HELD THAT - Although the license was granted for one year, appellants had in fact entered into a contract for three years. Indisputably, they participated in the bid which was held for a period of three years. The effect of the bid for the said period, however, would be considered a little later. As the said auction was confirmed, appellants started conducting their businesses. Indisputably, they furnished security. Some of them paid their kist regularly. Two sets of proceedings were initiated, as noticed hereinbefore, one in terms of Rule 6(28) and another in terms of Rule 6(30) of the Rules. The principles contained in the Heydon s Rule shall squarely be attracted in this case. It is a settled principle of interpretation of statute that when an amendment is made to an Act, or when a new enactment is made, Heydon s rule is often utilized in interpreting the same. For the purpose of construction of Rule 6(30), as it stands now, the Court is entitled to look to the legislative history for the purpose of finding out as to whether the mischief prior to such amendment is sought to be rectified or not. Applying the Heydon s rule, we have no other option but to hold that such was the intention on the part of the Rule making authority. It is also not a case that forfeiture was ordered in view of the judgment of conviction passed against the licensees. The step taken by the respondent State, for forfeiture of amount of deposit as also recovery of the amount of loss purported to have been sustained by them, could have taken recourse to in terms of Rule 6(34) if they were convicted. Recourse thereto could have been taken only by the appropriate authority. The same would not automatically follow only because the licence was cancelled in terms of Rule 6(30) of the Rules. Therefore, the Board, in our opinion, was not correct to hold that the consequences laid down in Rule 6(28) would automatically be attracted. We have noticed hereinbefore that the order passed under Rule 6(28) of the Rules must be confirmed by the Excise Commissioner. Such is not the requirement in case of cancellation of licence under Rule 6(30). We are of the opinion that it was impermissible for the Assistant Commissioner of Excise to pass the said order dated 19.12.1997 opining that the consequences of forfeiture under rule 6(28) is automatic upon cancellation of licence under Rule 6(30). We have noticed hereinbefore that the Commissioner of Excise being a higher authority had already expressed his opinion that application of Rule 6(28) of the Rules is automatic consequent upon the cancellation of licence in terms of sub-rule (30) of Rule 6. Assistant Commissioner of Excise could not have taken a different view. If only the Assistant Commissioner of Excise had the original authority to issue such a notice and not the Commissioner of Excise being an higher authority, the law laid down by this Court in Commissioner of Police, Bombay vs. Gordhandas Bhanji 1951 (11) TMI 17 - SUPREME COURT would have been applicable. The proceeding, thus, in a case of this nature should have been initiated by the Assistant Commissioner of Excise and not by the Commissioner of Excise. Where the statutory authority, it is well known, exercises his jurisdiction conferred on him by a statute, he has to apply his own mind and the procedures laid down therefore must be scrupulously followed. It is furthermore a well settled principle of law that a statutory authority must exercise its jurisdiction within the four corners of the statute. Any action taken which is not within the domain of the said authority would be illegal and without jurisdiction. Damages can be imposed on a licensee either for violation of the provisions of a statute on the part of the licensee and/or under the contract. So far as the damages to be levied under statute is concerned, it will be governed by the provisions of the statute. However, if damages are to be computed under the contract, the provisions of the Indian Contract Act and/or the terms of the contract would be relevant. Ordinarily, they should not be mixed up. If having regard to the provisions of Section 18A of the Act no contract for a period of more than one year could have been granted, damages could not have been calculated on the basis of the contract. The order of cancellation as also the forfeiture of security amount was passed. No statement had been made as to how and in what manner the State suffered any loss. If the amount of security is to be taken into consideration indisputably there would be no default. We may not moreover lose sight of another fact. Raids were conducted; shops were sealed on specific allegations, namely, the licensees had mixed some poisonous substance with liquor. They were prosecuted for adding Diazepem . Evidently, the fact that the chemical report showed that Diazepem had been mixed with toddy have prejudiced the licensing authority. Such prejudice is apparent even on the face of the impugned order passed by the High Court. Therefore, we are of the opinion that it was not a case where even Rule 6(28) could have also been resorted to. As we have not applied our mind to the judgment rendered by the criminal court leading to the acquittal of the appellants, we leave the parties to seek any other remedies available to them in law, The impugned judgment of the High Court is set aside. These appeals are allowed. Consequently the Writ Petitions stand allowed to the extent indicated above.
Issues Involved:
1. Interpretation of the Kerala Abkari Act and the Kerala Abkari Shops (Disposal in Auction) Rules, 1974. 2. Validity of the cancellation of licenses under Rule 6(30) and its consequences. 3. Applicability of Rule 6(28) in cases where licenses were canceled under Rule 6(30). 4. Requirement of compliance with principles of natural justice. 5. Calculation of damages and forfeiture of deposits. Issue-wise Detailed Analysis: 1. Interpretation of the Kerala Abkari Act and the Kerala Abkari Shops (Disposal in Auction) Rules, 1974: The Supreme Court examined the provisions of the Kerala Abkari Act and the Kerala Abkari Shops (Disposal in Auction) Rules, 1974, particularly focusing on Rules 6(28) and 6(30). The court noted that the Act regulates the manufacture and sale of liquor, including toddy, and that licenses are granted under strict conditions. The auction for toddy shops was held for three years, but licenses were issued for one year only. 2. Validity of the Cancellation of Licenses under Rule 6(30) and its Consequences: The court acknowledged that the cancellation of licenses under Rule 6(30) was valid due to the detection of "diazepam" in the toddy samples, which constituted a violation of the Act and the rules. However, the court emphasized that Rule 6(30) and Rule 6(28) operate in different fields. Rule 6(30) pertains to the cancellation of licenses due to infractions, while Rule 6(28) deals with the failure to pay kist (rent) and other dues. The court held that the consequences of Rule 6(28) do not automatically apply to cancellations under Rule 6(30). 3. Applicability of Rule 6(28) in Cases Where Licenses Were Canceled Under Rule 6(30): The court found that the Board of Revenue's decision to apply Rule 6(28) automatically upon cancellation under Rule 6(30) was incorrect. The deletion of the forfeiture clause from Rule 6(30) indicated a clear legislative intent not to apply such consequences. The court applied the Heydon's Rule to interpret the legislative intent behind the amendment, concluding that the forfeiture of deposits under Rule 6(28) was not intended for cancellations under Rule 6(30). 4. Requirement of Compliance with Principles of Natural Justice: The court stressed the importance of adhering to the principles of natural justice, especially in cases involving severe civil consequences like the cancellation of licenses and forfeiture of deposits. The court noted that the Commissioner of Excise had failed to provide the licensees with an opportunity to be heard, thus violating the principles of natural justice. The court also highlighted that any proceeding for forfeiture should have been initiated by the Assistant Commissioner of Excise, not the Commissioner, to ensure compliance with due process. 5. Calculation of Damages and Forfeiture of Deposits: The court examined the calculation of damages and the forfeiture of deposits. It was found that the demand for damages was based on the assumption of a three-year contract, which was incorrect as the licenses were granted for only one year. The court emphasized that damages should be calculated based on actual losses and in accordance with the provisions of the Indian Contract Act, particularly Section 74, which limits the recovery to reasonable compensation. The court also noted that the amount of security deposited should have been considered in calculating the damages, and the State should have recouped its losses from this amount. Conclusion: The Supreme Court set aside the judgment of the High Court, holding that the automatic application of Rule 6(28) upon cancellation under Rule 6(30) was incorrect. The court emphasized the need for compliance with principles of natural justice and proper calculation of damages. The appeals were allowed, and the writ petitions were granted to the extent indicated, with no order as to costs.
|
